India Wheat Exports Seen Climbing on Record Plunge in Rupee

Aug. 29 (Bloomberg) -- India, the world’s second-largest
wheat producer, may resume exports after a gap of three months
as a slump in the nation’s currency to a record lowers costs for
importers from South Asia to the Middle East.

Private traders may ship about 1 million metric tons by
March, said Tejinder Narang, an adviser with Emmsons
International Ltd., a New Delhi-based exporter. Sales may
increase further if the government cuts the export price of
grains from its stockpiles, he said.

Resumption of Indian exports may add to global supplies and
pressure prices in Chicago that have fallen 27 percent in the
past year on prospects for the biggest crop ever. The rupee
tumbled 17 percent this year, boosting export potential of
everything from rice to wheat to sugar and cotton, while
increasing costs for imports of gold and crude oil. Indian wheat
will compete with grain from the Black Sea region, said Vijay
Iyengar, managing director of Agrocorp International Pte.

“The weak currency will make Indian wheat more competitive
in the world market,” Abdolreza Abbassian, an economist at the
United Nations’ Food & Agriculture Organization, said in a phone
interview yesterday. “There is potential to increase exports.
To export more, or to be more competitive, Indian price has to
be closer to the world market.”

Indian supplies at about $260 a ton free-on-board basis
could compete with those from Russia and Ukraine, Emmsons’
Narang said. Egypt, the world’s biggest importer, bought 295,000
tons of wheat yesterday at prices from $250.44 a ton and $254 a
ton, said Mamdouh Abdel Fattah, vice chairman of the state-run
General Authority for Supply Commodities.

New Contracts

Wheat for December delivery fell 0.5 percent to $6.56 a
bushel on the Chicago Board of Trade at 5:43 p.m. in Mumbai.
Futures are heading for a 1.1 percent this month. Global output
is expected to rise 6.8 percent to a record 704 million tons
this year, according to the Rome-based Food & Agriculture
Organization.

Private companies may start signing new contracts for
exports to India’s neighboring countries, Indonesia and the
Middle East, Agrocorp’s Iyengar said. Sales from state reserves
may fail as the minimum price of $300 a ton was more than the
current global prices, he said. Shipments came to a halt since
June after a rally in local prices shunned foreign buyers.

“It makes sense for the government to reduce the price to
reflect the current exchange rate to increase exports and reduce
stocks,” Singapore-based Iyengar said in a phone interview
yesterday. “Their rupee balance sheet will be same even if they
cut the price. There will be no loss from exports.”

Rupee Loss

The rupee is the worst performer after Brazil’s real among
24 major emerging economies in the past six months on concern
that foreign capital outflows will accelerate as the U.S.
Federal Reserve prepares to trim monetary stimulus. The currency
tumbled to an unprecedented 68.8450 yesterday and is headed for
the worst annual loss since a balance of payments crisis in 1991
forced the nation to pawn gold to pay for imports.

State stockpiles of wheat totaled 40.4 million tons at the
start of this month, according to the Food Corp. of India. The
government buys about 30 percent of rice and wheat output from
farmers at prices set by the state.

Shipments totaled 2.4 million tons since April 1, according
to government data. The country exported a record 5.3 million
tons in 2012-2013, official data showed.